COMMERCIAL VEHICLE TIRE MARKET

INTRODUCTIONCOMMERCIAL VEHICLE TIREMARKET

Major function of tire is to protect rim and provide the tractive force between road surface and the vehicle. The ongoing pandemic has undoubtedly slowed down the market as the production had come to halt in many regions. Since the beginning of April slowly the plants have been partially restarted and the market has started at slow pace.

COMMERCIAL VEHICLE TIREMARKET SEGMENTATION

Commercial Vehicle Tire Market By Rim Size

• 15-17
• 18-20
• >20

Commercial Vehicle Tire Market By Tire Position

• Steer
• Drive
• Trailer

Commercial Vehicle Tire Market By Vehicle Type

• Light Commercial Vehicles
• Heavy Commercial Vehicles

Commercial Vehicle Tire Market By Distribution Channel

• OEM
• Aftermarket

Commercial Vehicle Tire Market By Geography

• US
• Europe
• China
• India
• ROW

COMMERCIAL VEHICLE TIREMARKET DYNAMICS

Overall the tire development process has been shortened. The electrification of light trucks has led to changes in the tire manufacturing, as the EVs have quicker start power than the diesel trucks the tires are subjected to wear and necessary changes in production becomes inevitable.

Last mile delivery and e-commerce in different regions will impact positively to the commercial vehicle tire segment. Increase in last mile deliveries will increase the demand for sub 20 inch rim size tires i.e. 16, 17.5 and 19.5 inches tires.

The global economy remains dependent on Asia for 90% of the natural rubber supply.U.S. imported about $140 million worth of natural rubber in March 2021 alone, according to USTMA data. 

The global natural rubber market was valued at nearly $XX billion in 2020, and demand for rubber is expected to increase. The global economy now faces a rubber shortage because of multiple supply chain disruptions.

The original equipment shipment for light truck and truck tire is expected to decrease by more than 30%. Whereas, the replacement shipment is expected to witness a small decline by 7%. The global rubber market was valued at nearly $40 billion in 2020, but an analysis predicts the natural rubber market could be worth nearly $68.5 billion by 2026.

COMMERCIAL VEHICLE TIREMARKETBY TIRE POSITION

The steer tire 1 of the 3 segments based on the position of the tires in the truck vehicles is fitted to the front axle. Many steer tires are considered to be all position tires.

The drive tire is mounted on the rear axle of the vehicle. They are mounted in dual wheel configuration. These tires are provided with spied tread for superior traction. Similar to drive tires trailer tires are also mounted in dual wheel configuration. These are expected to withstand heavy loads and have reinforced sidewalls to protect against curbing.

Since the trailer tires are more in number in multi axle vehicle to withstand heavy loads the trailer tires are the occupy larger market share in the segment.

COMMERCIAL VEHICLE TIREMARKETBY DISTRIBUTION CHANNEL

The Aftermarket sales channel outsold OEM market in every region. Average life span of truck and buses based on wear and tear was found to be 3-4 years. The current crisis period has affected the vehicles sales and thus slowdown in the OEM market.

The presence of large number of competitors providing the same performance and range plays an important part in increased sales in aftermarket segment.

COMMERCIAL VEHICLE TIREMARKETUS COMMERCIAL VEHICLE TIRE MARKET

The increase in tariffs on Chinese imported products in 2019 caused a major turbulence in the market, as more than 3/4^th of the market was occupied by China produced goods compared to domestically produced products.

Due to the ongoing COVID-19 pandemic and aftermath is expected to affect the tire market in the region. The original equipment shipment for light truck and truck tire is expected to decrease by more than 30%. Whereas, the replacement shipment is expected to witness small decline by 7%.

 For 2021, USTMA projects an Original Equipment (OE) shipment increase of 5.2 million units & a replacement shipment increase of 27.7 million units Y-o-Y across vehicle segments. 

Comparing with 2020, Original Equipment (OE) shipments for passenger, light truck and truck tires are expected to increase by 9.9%, 6.2%, and 25.3% respectively, with a total increase of 5.2 million units. Replacement shipments for passenger, light truck and truck tires are also projected to increase by 10.1%, 13.2%, and 14.6% respectively, with a total increase of 27.7 million units. 

Due to the ongoing COVID-19 pandemicthe rubber producers have to deal with many problems and theyare working against all odds like climate change and also the fight for shipping containers.

COMMERCIAL VEHICLE TIREMARKETEUROPECOMMERCIAL VEHICLE TIRE MARKET

The OE truck tires market in 2019 saw a dip by 10% compared to 2018. While, the replacement market in the region witnessed a negligible growth in 2019.

In Europe, the increased in the duties on the Chinese imports led to high spike in the imports form ASEAN and South Korea. The imports from ASEAN in the last 2 years grew by 215 % in 2018 and 170% 2019. The South Korean imports in 2018 were witnessed growth by 117% and 7% in 2019.

In 2020, original equipment was the most strongly affected segment recording a dip of 18% in the truck tyres segment. However, in the replacement market of truck tyres the volume fell by only 4% Y-o-Y and ended at 12.08 million units.

In 2020 the top countries in the sales of replacement truck and bus tires were found to be Turkey, Germany and Italy completing the top 3.

The demands for commercial vehicles increased by 43.9% in the first 5 months of 2021.  All four major EU markets improved their overall results along with their increase in demands for HCV, MHCV, MHBC (Medium & Heavy Buses & Coaches) which accelerated by 40.1%, 34.7% and 18.1% respectively.  

In Q-2021, each of the tyre segments witnessed a significant increase compared to previous year. Truck tyre replacement increased by 42% followed by the Moto and Scooter segment (41%. Overall, the tyres replacement increased by 44% Y-o-Y. After 6 months the numbers looked promising and the market was inching closer to pre-COVID numbers.

The below chart shows the sales of truck and bus tires of top 5 5 European countries in 2019:

In order to address the concern raised by the recent climatic laws enforced,European tyre industry is ready to contribute to the decarbonisation goals. Mobility has a role to play as a pillar of this ambition. Hence, ETRMA’s members have been committed to reducing their CO2 footprint throughout the tyre life cycle and investing in innovative and sustainable mobility technologies for many years now. 

COMMERCIAL VEHICLE TIREMARKETCHINACOMMERCIAL VEHICLE TIRE MARKET

The over the road equipment like earth moving equipments’ tire has witnessed higher demand than the truck tire equipment. China which held 64% share in 2017 in the exports of truck tires to Europe, now holds 16% share as of 2019 and is the 3^rd highest exporter to the region.

Sailun Group Co Ltd has planned to double the capacity of radial truck and bus tires at its Liaoning plant. They are planning to reach 6 million units a year by 2022.

Guizhou Tire is setting up 2 new factories in the Guiyang province and the capacity is slated to be 3 million truck tires a year.

COMMERCIAL VEHICLE TIREMARKETINDIACOMMERCIAL VEHICLE TIRE MARKET

Year 2019 has witnessed combined 31% increase in LCV, truck and bus tire production in the country.

Import duties on tires in the country are expected to be increased from 15% to 40% after tires were included in the products list to undergo basic customs changes in the 2020 Budget.

The global economy remains dependent on Asia for 90% of the natural rubber supply. Thereforethe tyre companies in India are now trying to leverage their profit by adapting various changes in their operations, business strategies and investment decisions.

 India finds an immense potential for growth for the Indian Tyre Industry in the emerging new world order. However, effective collaboration between the industry and raw material partners is imperative to harness this potential . 

JK Tyre & Industries is working on de-bottlenecking operations to enhance capacity amid an expected surge in demand post the second wave of the pandemic, as well as reducing long-term debt by a third, or Rs 1,500 crore, over the next three years. 

The US continues to be the largest market for Indian tyres accounting for 17 per cent of total tyres exported from the country during the year, Tyre exports from India grew by 10 per cent in value terms in 2020-21 to touch Rs 14,097 crore . 

Whereas citing the latest data released by the Ministry of Commerce, ATMA said in volume terms tyre exports went up by 8 per cent and reached 3.64 crore .  In the last five years, tyre exports from India have gone up by 60 per cent from Rs 8,825 crore in FY16 to Rs 14,097 crore in FY21, barring a marginal contraction witnessed in tyre exports in FY20.

COMMERCIAL VEHICLE TIREMARKET SIZE AND FORECAST

The EU council is adopting new rules of labelling the tires. They are now including more visible information such as fuel efficiency, wet grip and noise, these parameters will help the customers to buy the best tire for the vehicle.

There have been continuous efforts to minimise the pollution and waste caused by the old tires ever year. About 1 billion tyres reach the end of their life every year, to encounter this Michelin has partnered with Swedish start-up Enviro and bought 20% of its stake to recycle the tires to new raw materials using pyrolysis process.  

COMMERCIAL VEHICLE TIREMARKETRECENT MARKET TREND

• Bridgestone Americas Inc. is developing an airless truck tire for commercial trailers, where ~ 40% of tire failures occur
• Bridgestone also launched M713 Ecopia tire, a California Air Resources Board (CARB) compliant drive tire for tandem-axle applications in long-haul and regional service. The tire also features an IntelliShape sidewall that reduces overall tire weight to minimize rolling resistance
• Yokohama Tire launched two new spiral E-3 tires, the non-directional RT31 and the directional RT32.
• Kumho, a Korean tire player launched world’s first 20-inch commercial vehicle tire in 45 profile, and is providing it to Hyundai for Original Equipment fit to the Solati bus. The variant of the Kumho ProTran KC53 was launched in 245/45R20C 115/113R configuration
• Carbon black supplier, Cabot Corp. has developed an engineered elastomer composite which it claims can extend the life of off-highway vehicles significantly. The pre-mixed composite solutions of elastomers require fewer mixing stages, lower mixing temperatures and shorter mixing cycles than conventional products
• Bridgestone India  launches a new tyre, V-Steel Mix M721, for thecommercial vehicle segmentwith an aim to establish a strong presence in the drive axle tyre category.
• Pirelli announces its first ever high-load index tire, targeting  the electric and hybrid car and SUV markets. Its latest tyre feature claims to  withstand 6-9% more weight than an extra-load XL tire in the same size. Whereas the HL (high load) marking on the sidewall supports 20% more weight than conventional tires.
• The Recon Grappler by Nitto, has been engineered specifically to improve comfort and limit road noise, featuring an aggressive tread pattern with deep sidewall lugs extending 5-7mm to improve traction in both wet and dry conditions; it also provides the vehicles with a good traction off-road. 
• Stated to provide up to 25% more mileage Michelin has announced the launch of two new pre-mold retreads to expand the manufacturer’s portfolio of tire retread technologies. The retread will provide maximum tread-to-shoulder adhesion in high scrub applications. 
• Ideal for muddy, challenging construction sites and agriculture applications. Titan has introduced the new HK 458, a crossover wheel loader tire suitable for extreme loader applications requiring aggressive traction and high levels of self-cleaning. The E-4/L-4 dual-rated bias tire combines the tread design of a forestry tire, a wheel loader tire and an ATV tire. 
• DPD is joining forces with the electric vehicle tire developer Enso to conduct full road trials of a new commercial EV tire design, specified to reduce air and microplastic pollution.
• Continental to test its concept tires to shorter development times and reduce rolling resistance The Continental tire prototypes for E-Trucks at the Contidrom. 
• Continental Expands Commercial Light Truck Tire Portfolio with 16-inch All-Steel Radial, Conti LAR 3 . 
• The rubber company Goodyear unveiled its plans to release new tires and retreads for commercial vehicles next year as it anticipates trucking business to grow in 2021.
• Major commercial tire manufacturers such as Yokohama, Bridgestone and others restarted their plants in US by mid-April, which was shut down due to the COVID-19 pandemic breakout.
• In January 2020, JK Tyres launched Jet Xtra XLM tires for the LCV segment of vehicles.
• Cooper Tire & Rubber Co. and Sailun Vietnam Co., Ltd recently completed the production of first batch of truck and bus radial tyres in their JV at Ho Chi Minh City Vietnam.
• Apollo Tyres has inaugurated its first truck tyre centre in Thailand.
• In November 2019 Shandong Linglong Tire CO Ltd started the production of radial trucks and buses at its newest factory in Jingmen region.
• Ralson India is expanding its fleet from 2 and 3-wheeler tire industry to heavy commercial vehicle segment. It is setting up a plant in Indore, Madhya Pradesh.
• Apollo Tyres has tied up with Al-Jomaih Tyres of Saudi Arabia and primary focus is given to truck and bus radial tyres.
• In November 2019, Cooper Tires from US, increased the ownership in its Mexico JV Corporación de Occidente S.A to 100% and the deal is expected to be completed by this year. 
• Continental develops 10.00R20 HYBRID CHA2 tyres to withstand high endurance in the most trying road conditions and driving surfaces. The highly durable tyre is designed to ensure minimum stone trapping, and better wet traction, among others.

COMMERCIAL VEHICLE TIREMARKETCOMPETITIVE LANDSCAPE

Bridgestone (Japan), Michelin (France) and Goodyear (US) are the top 3 CV tire manufacturers in the world. The Asian tire manufacturers occupy the highest market share China, Japan and India the major contributors. Some of the Asian manufacturers are Yokohama (Japan), MRF (India), Zhongce (China), Sumitomo (Japan) Linglong (China), Hankook (South Korea) and Apollo (India). Some of the European and American manufacturers are Pirelli (Italy), Continental (Germany), Zenises (UK), Cooper Tires (US).

• Apollo Tyres will sell the truck and bus tyres in the US and Canada under the Apollo brand. The company is already present in the passenger vehicle tyres segment in the US and Canadian market under the brand Vredestein.
• In order to offset the impact of rise in input costs. French tyre major Michelin on Tuesday said it will increase tyre prices in India by 8% The price revision addresses the increase of raw material cost, natural rubber in particular, global transportation cost and other market factors, it added.
• Tyre maker Ceat is looking at export opportunities for its speciality tyres in Europe and North America, and is also exploring new markets for radial tyres for buses and trucks,
• Continental said it plans to significantly expand truck tyres production capacity at the Modipuram plant in Uttar Pradesh over the next 18 months.
• The Automotive Tyre Manufacturers Association (ATMA) in India  states  the timelines for the adoption of new norms, involving requirements for rolling resistance, wet grip and rolling sound emission, the association will need a  revision to enable the industry to test a large number of stock keeping units (SKUs).
• Goodyear announced plans to significantly expand the UK operations of its 24/7 commercial vehicle support network,TruckForce. Commercial vehicle support network to increase both headcount and number of vans by 30%
• Continental tires performed well at the beginning of the year, particularly in China and North America. The ContiTech business profited after a recovery in global vehicle production, in the first quarter, especially in China, and from stable industrial business. It evaluated its consolidated sales of the first three months of the year amounted to €10.3 billion (Q1 2020: €9.9 billion, +3.5 percent). 
• Sumitomo Rubber Industries witnessed a 12% growth in its sales costing ¥213,688 million as compared to ¥190,794 in march 2020, the business profit accounted for 16,202 million yen with a growth of 468.8%. 
• MRF experiences an overall decrease of 12% in total tyre production. The values evaluated as of FY2021, suggests that the total income stood₹16,129 crores as against₹16,322 crores in the previous year. The profit before tax stood at₹1,700 crores for the year as against₹1,399 crores for the previous financial year. 
• With the recovery of the global economy Pirelli marks growth in its sales for the Standard segment. In 1stQ-2021, net sales amounted to € 1,244.7 million, which shows a growth of +18.4% as compared to the first quarter of 2020.

COMMERCIAL VEHICLE TIREMARKETCOMPANY PROFILE

1. Pirelli
2. Bridgestone
3. Continental
4. Goodyear Tire and Rubber Company
5. Michelin
6. Yokohama
7. Apollo
8. MRF Tyres
9. Hangzhou Zhongce
10. JK Tyres
11. Sumitomo
12. Hankook
13. Linglong
14. Weifang Goldshield Tire
15. Toyo Tire